Synthetic vs. True Identity Fraud

By Eva Velasquez, CEO & President of the Identity Theft Resource Center

We’ve come a long way since identity theft was a commonly misunderstood and rarely recognized crime. Now this category of crime might be a household name, but it still presents a few surprises to both victims and law enforcement alike. As identity thieves and scammers continue to evolve to stay ahead, the crime itself changes, too.

One newly recognized factor is the difference in how the identities that are being used to commit the crime are created. It is widely recognized that there are namely two different ways in which fake identities are manifested: “true name” identity fraud and synthetic identity fraud. “True name” identity fraud occurs when someone uses a single person’s actual identifying information. This is what many of us are used to thinking about when we think of identity theft. A thief uses someone’s Social Security number (SSN), credit card information, actual date of birth, or other personal identifying information either to create new accounts or to take over existing ones. In essence, the criminal has assumed the identity of the actual person.

Synthetic identity fraud, on the other hand, works in a wide variety of ways depending on how the criminal operates, and can, therefore, impact you as a victim in different ways, too. Synthetic identity fraud occurs when an identity thief takes bits of personal information from many different people, or fake information altogether, to create an identity to use in theft.

This is a typical synthetic identity scenario: Imagine you are the criminal. First, you steal the SSN from someone that just happens to be a 6-year-old and create a bogus name. Second, you establish a credit file for that synthetic identity, eventually building a bogus, but realistic, credit history. Third, you use that synthetic identity to commit credit card fraud to the tune of thousands of dollars. Now imagine you are that child. Later in life, when you apply for your first student loan or credit card, you will learn that your SSN has been “used” by a criminal for years. Part of your personal information has been used to create a synthetic identity. The amount of time and effort it will take to clean that up? Staggering.

Another common way that consumers are being victimized is with synthetic identity fraud under the guise of credit repair.

Authorities have already made arrests in several different crime rings that rely on something called a Credit Profile Number (CPN). Scammers are selling credit repair services by claiming that they’ve filed for a “legal” CPN on behalf of the victims. This number, they explain, is to be used in place of a SSN for people who’ve come forward for credit help. They actually state that victims can use the CPN to open even more credit card accounts and lines of credit.

It is vital that the public understand that CPNs are not issued by the government and cannot be used legally on any financial, employment, or government benefits applications. These numbers are sometimes stolen SSNs (often times belonging to children) or made up numbers that scammers sell to unwary victims, and using them on applications amounts to credit card fraud. But that doesn’t stop scammers from telling you they’re completely legal and charging you money for them. Rather than helping you fix your credit problems, they are only compounding the issue by helping you commit fraud (and possibly ruin the credit profile of the rightful owner of that SSN).

While much of the focus on synthetic identity fraud has been on financial fraud, the crime can impact victims in another way, should one piece of the personal information a thief gives is yours. For example, it could lead to criminal identity theft if, during arrest, the person being arrested states a name then rattles off a nine-digit series of numbers as their SSN which happens to belong to you, connecting your personal information to the arrest.

Of course, being victim to one of these types of identity theft does not mean that you will not become a victim of the other. Once your information has been compromised, there is no telling where it may end up. That’s why it’s important to monitor your credit reports and all account statements carefully for signs of suspicious activity and to report anything out of the ordinary immediately.

Contact the Identity Theft Resource Center for toll-free, no-cost assistance at (888) 400-5530. For on-the-go assistance, check out the free ID Theft Help App from ITRC.